Annual report [Section 13 and 15(d), not S-K Item 405]

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
 12 Months Ended
Jan. 03, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Summary of Derivative Financial Instruments
The Company enters into derivative contracts with external counterparties on a recurring basis to hedge certain foreign currency transactions. The notional amount of these outstanding foreign currency exchange contracts was $717.4 million at December 2025 and $303.0 million at December 2024, consisting primarily of contracts hedging exposures to the Norwegian krone, Mexican peso, euro, Canadian dollar, Polish zloty, Swedish krona and the British pound. Foreign currency exchange contracts have maturities up to 20 months.
The Company periodically enters into "floating to fixed" interest rate swap agreements to mitigate exposure to volatility in reference rates on the Company's future interest payments on indebtedness. Because these swap agreements meet the criteria for hedge accounting, all related gains and losses are deferred within accumulated other comprehensive loss ("AOCL") in the Company's balance sheets and are amortized through the swap maturity dates.
During 2019, the Company entered into "floating to fixed" interest rate swap agreements that matured on April 18, 2024. On September 9, 2024, the Company entered into "floating to fixed" interest rate swap agreements (the "2024 Swap Agreements") that mature on August 18, 2029. In April 2025, the Company entered into "floating to fixed" interest rate swap agreements (the "2025 Swap Agreements") that mature on March 18, 2027, and April 18, 2027. The notional amount of the 2024 Swap Agreements and the 2025 Swap Agreements was $550.0 million at December 2025 and was $150.0 million for the 2024 Swap Agreements at December 2024.
The Company's outstanding derivative financial instruments met the criteria for hedge accounting at the inception of the hedging relationship. At each reporting period, the Company assesses whether the hedging relationships continue to be highly effective in offsetting changes in cash flows of hedged items. If the Company determines that a specific hedging relationship has ceased to be highly effective, it discontinues hedge accounting. All designated hedging relationships were determined to be highly effective as of December 2025.
The following table presents the fair value of outstanding derivatives on an individual contract basis:
   Fair Value of Derivatives with Unrealized Gains Fair Value of Derivatives with Unrealized Losses
(In thousands) December 2025 December 2024 December 2025 December 2024
Derivatives designated as hedging instruments:
Foreign currency exchange contracts $ 11,373  $ 7,720  $ (9,641) $ (11,620)
Interest rate swap agreements 279  5,390  —  — 
Derivatives not designated as hedging instruments:
Foreign currency exchange contracts —  —  (255) — 
Total derivatives $ 11,652  $ 13,110  $ (9,896) $ (11,620)
The Company records and presents the fair value of all derivative assets and liabilities in the Company's balance sheets on a gross basis, even though certain derivative contracts are subject to master netting agreements. If the Company were to offset and record the asset and liability balances of its derivative contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Company's balance sheets would be adjusted from the current gross presentation to the net amounts.
The following table presents a reconciliation of gross to net amounts for derivative asset and liability balances:
December 2025 December 2024
(In thousands) Derivative Asset Derivative Liability Derivative Asset Derivative Liability
Gross amounts presented in the balance sheet $ 11,652  $ (9,896) $ 13,110  $ (11,620)
Gross amounts not offset in the balance sheet (3,043) 3,043  (3,468) 3,468 
Net amounts $ 8,609  $ (6,853) $ 9,642  $ (8,152)
The following table presents the location of derivatives in the Company's balance sheets, with current or noncurrent classification based on maturity dates:
(In thousands) December 2025 December 2024
Prepaid expenses and other current assets $ 9,906  $ 5,845 
Accrued and other current liabilities (8,546) (10,659)
Other assets 1,746  7,265 
Other liabilities (1,350) (961)
Cash Flow Hedges
The following tables present the pre-tax effects of cash flow hedges included in the Company's statements of operations and statements of comprehensive income:
Gain (Loss) on Derivatives Recognized in AOCL
(In thousands)
Year Ended December
Cash Flow Hedging Relationships 2025 2024 2023
Foreign currency exchange contracts $ 2,704  $ (6,164) $ 22,590 
Interest rate swap agreements (1,431) 6,084  1,829 
Total $ 1,273  $ (80) $ 24,419 
Gain (Loss) Reclassified from AOCL into Income
(In thousands)
Year Ended December
Location of Gain (Loss) 2025 2024 2023
Net revenues $ (1,409) $ (2,019) $ (219)
Cost of goods sold (3,287) 17,476  23,588 
Other income (expense), net 47  361  527 
Interest expense 3,680  3,947  9,933 
Total $ (969) $ 19,765  $ 33,829 
Derivative Contracts Not Designated as Hedges
Any derivative contracts that are not designated as hedges are recorded at fair value in the Company's balance sheets, and changes in the fair values of these contracts are recognized directly in earnings. During the first and second quarters of 2025, the Company entered into foreign currency exchange contracts totaling $1.3 billion CAD to hedge the purchase price of the Acquisition, which were settled on May 30, 2025, for a gain of $24.1 million. Derivative contracts not designated as hedges include these purchase price hedge contracts, along with a limited number of cash flow hedges that were deemed ineffective and undesignated during the year ended December 2025 and December 2024. Refer to Note 2 to the Company's financial statements in this Form 10-K for additional information related to the Acquisition.
Additionally, during 2025, the Company executed balance sheet hedge contracts to mitigate balance sheet foreign currency exchange risks related to intercompany loans. The notional amount of these outstanding foreign currency exchange contracts was $87.5 million at December 2025.
The following table presents a summary of derivatives not designated as hedges included in the Company's statements of operations:
(In thousands) Location of Gain (Loss) on Derivatives Recognized in Income Gain (Loss) on Derivatives Recognized in Income
Derivatives Not Designated as Hedges Three Months Ended December Twelve Months Ended December
2025 2024 2025 2024
Foreign currency exchange contracts Net revenues $ (384) $ —  $ (245) $ — 
Foreign currency exchange contracts Cost of goods sold (52) —  823  6 
Foreign currency exchange contracts Other income (expense), net 90  (2) 24,196  (12)
Total $ (346) $ (2) $ 24,774  $ (6)
Other Derivative Information
There were no significant amounts recognized in earnings for changes in the fair values of derivative contracts not designated as hedges or the ineffective portion of any hedging relationships during 2023.
At December 2025, AOCL included $1.0 million of pre-tax net deferred gains for foreign currency exchange contracts and interest rate swap agreements that are expected to be reclassified to earnings during the next 12 months. The amounts ultimately reclassified to earnings will depend on rates in effect when outstanding derivative contracts are settled.